Unemployment in the US remained steady at 5.0% in September as the number of people in the US in employment increased and the participation rate rose. 156,000 new jobs were created but the participation rate rose from 62.8% to 62.9% leaving the unemployment rate steady at 5.0%.
Although the numbers were slightly less than expected, the probability of a December rate rise implied by Federal funds futures rose from 55% to 60%, the 2 year bond yield fell back 2bps to 0.83% and the 10 year bond yield edged down 1bps 1.72%.
UBS economist Samuel Coffin pointed to what he saw as symptoms of reduced slack in the number of people available for new jobs. “Over the past twelve months, low-wage industry employment has risen 2.0% and high-wage industry employment 1.9%. That steady-ish job quality suggests that the strength in job openings is not because of skills shortage but is instead because of broader labor (sic) market tightness.” ANZ Research focussed on a rise in hourly rates of pay and said, “Average earnings rose to 2.6% y/y, indicating wage pressures are gradually moving higher… The trend growth in the labour market is slowing, but that’s because available slack is less and the expansion is mature…The market viewed the figures as strong enough to keep prospects of a December Fed rate hike on track.”